Welcome to Googleville

I have seen the future. And it’s 84 miles east of Portland, in my hometown of The Dalles.

That’s right, The Dalles. Population 13,000; land of cherry orchards, wheat fields and wineries.

The Dalles was once home to Celilo Falls. It’s the same town that welcomed my great-grandparents on Sept. 25, 1907. The same town where 24 years ago Rajneeshees tried to poison residents, the first bioterrorist attack on U.S. soil.

It is this town that represents destiny, if you’re to believe Philip Klindt.

A few weeks ago I sat with Klindt, a Dalles High grad of ’58, in Klindts Booksellers, the oldest bookstore in Oregon. We talked about family members long gone. And we talked about the future, which he thinks can be found in a set of two buildings that sits on his old family farm at the west end of town, on Klindt Road.

“It’s attracted the right kind of people,” said Klindt, who said he didn’t want to sound too elitist.

Elitist? That’s not what I think of when I think of The Dalles. Far from it. To me, it’s just a dusty town on the edge of oblivion. Someplace my family had to move from—even though we had been there for several generations—so my dad could find work.

I was reminded of that as I later drove down Klindt Road near the Columbia River, past the scrapped Martin Marietta aluminum plant that once employed 1,000 locals, and came upon a nondescript complex of buildings, about the size of a football field, two stories high with an iron fence surrounding it and giant HVAC units sitting on the roof. There was a lone dog wandering outside the gate, and no signs indicating what was inside.

Yet what is inside is arguably more illustrative of the new American economy than any other company in Oregon.

Welcome to Google.

It’s hard to be hyperbolic when talking about Google. The company barely existed 10 years ago, and today it has one of the largest market capitalizations of any company in the world. It has a near-monopoly on Web searches, expects to generate $16 billion in ad revenue this year and, to many industry observers, represents the future of the Internet. “Their ultimate aim seems to me to be, ‘One Google, under Google, for which it stands,’” said tech observer Brian Lent in a story for The New York Times about Google’s growth. Lent attended Stanford University with Google’s founders and is now president of a Seattle mobile-phone-based Internet search startup.

The company is considered by many today to be what Microsoft was 20 years ago: In an interview with Fortune, Microsoft chairman Bill Gates said Google was “more like us than anyone else we have ever competed with.” This “little search engine that could” is now the established leader in the computer industry and on the verge of becoming as much a part of our daily existence as air and water.

What is Google’s secret ingredient? Some think it is the legion of MIT engineers who devise the complicated algorithms that allow me to search for “The Dalles” and in .12 seconds get back over 913,000 links. Others, however, think Google’s edge has to do with something far more prosaic.

“I believe that the physical network is Google’s ‘secret sauce,’ its premier competitive advantage,” New York Times columnist G. Pascal Zachary (a former WW staffer) wrote last September. “Without the computer network, Google is nothing.”

The physical networks that are Google’s “secret sauce” are called data centers (a.k.a. server farms). And that’s what sits inside those nondescript buildings in The Dalles: a giant server farm. The two low-slung, supermarket-looking structures allow the world to search the Internet, store files and send email.

But here’s what’s weird: Few people know just how many hundreds—or thousands—of servers are inside. Or if The Dalles center is one of 10 or 1,000 such centers Google operates around the globe. That’s because Google guards such details as closely as corporate secrets. Which, apparently, they are.

Or are they?

“It was the worst-kept secret in town,” says Klindt, adding that city officials and representatives for Google called the search engine’s big move to The Dalles “Project O2” when it began in 2005.

When Google officials first began sniffing around for a site, they didn’t say who they worked for. And when Google decided to build here, it bought the property through a third party, Design LLC. Andrea Klaas, marketing director for the Port of The Dalles at the time, says Google’s plan was that no one would ever know it was Google—not even the people who worked there. “I couldn’t even say the name of the company,” says Klaas, one of the dozen or so public officials who signed nondisclosure agreements with Google.

She knew the secrecy couldn’t last for long because the port is a public body subject to Oregon’s Public Meeting Laws. It was just a matter of time before everyone in town knew. For Klaas, the cloak-and-dagger stuff was something to have fun with. “We all knew what it was, but nobody talked about it,” she says.

Google released Klaas from her nondisclosure agreement in mid-2006, around the time of the project’s completion. “The release allows me to publicly discuss certain aspects of the project—like its name, address and phone number—but not all details of the real-estate transaction and project,” Klaas says.

Google might be rethinking its stance on secrecy, according to Google’s operations manager for The Dalles, Ken Patchett. Patchett agreed to meet with me at what locals have dubbed “Googleville.” At the same time, the company is still a little touchy about revealing operational details to the outside world. I was allowed into the security building and whisked into a conference room, but when I asked if I could go inside the plant, Patchett said: “That’s not going to happen today.”

Since arriving at Google (from Microsoft), Patchett has tried to patch up whatever hard feelings people in The Dalles have about Google being so hush-hush. To that end, Patchett sits on the board of The Dalles Chamber of Commerce, something Google officials never did before in any town. “We are now going to do that in every rural data center we build,” Patchett says.

But when I started to ask him about internal workings of the data center, Patchett clammed up. “You know, I can’t tell you that,” he said. He did invite me to join him for a meal at a later date inside the building that housed the cafeteria. That is, so long as I signed a nondisclosure agreement. I declined.

Mayor Robb Van Cleave has yet to set foot on Google’s campus, and may never do so. That’s because he, too, refused to sign a nondisclosure agreement.

“The perception, at the time of negotiation with Google, by the local press and the public at large, was that a large employer was on the way, but that no one could talk about it because everyone involved in the negotiations—port, city, county and power officials, and over a dozen more people—had all signed nondisclosures,” says Van Cleave. “I felt strongly that if I didn’t sign the nondisclosure, I could still speak freely to the press and public about what was going on down at the port.”

Perhaps the greatest irony of this new-economy facility is how old economy it is when it comes to energy consumption. Not unlike the aluminum smelter that once sat within a stone’s throw of Google’s data center, Google is a huge energy sucker.

While Google won’t reveal its energy use, many magazine articles and blog posts have been written about the increasing energy demands of data centers.

Steve Hamm, in an article in the March 31, 2008, issue of Business Week, said it best: “People don’t typically think of information as having substance…but when bits of data…move across the wires of semiconductor chips…they meet resistance. Overcoming resistance requires energy and creates heat. Move enough bits around, and you have one huge bill for powering and cooling the equipment.”

Some estimate that Google uses 30 megawatts of electricity per hour—enough to power 22,000 homes.

Google is aware of its energy use. “Google doesn’t want to overuse, lose or abuse power,” said Patchett, who didn’t seem to see the irony in that statement. “We are constantly trying to become more efficient about our use of power.”

And while Google won’t reveal what it is paying for electricity, it is clear that Google is getting a deal. Even Google will admit that cheap power was the chief attraction of locating a server farm in The Dalles.

“They are a preferred customer,” said Paul Titus, engineer for the Northern Wasco County People’s Utility District. But Titus would not discuss or disclose Google’s energy consumption. “Whether it’s Google or your next-door neighbor, we don’t make that information public,” he says.

According to Steve Weiss, a senior policy associate at the Northwest Energy Coalition, Google is probably paying about $219,000 for each megawatt per year. The market rate for that power is at least twice that—$500,000. Taking Google’s use of power over the course of a year, Google is saving almost $8.5 million a year in electricity costs—a tab Weiss claims is picked up by other power customers who don’t get the preferred rate. As Weiss puts it, this amounts to a $42,000-a-year annual subsidy for each of the 200 jobs that Google has created in The Dalles.

In addition to the promise of cheap power, Google received a 15-year property tax exemption for improvements it made on its 30-plus acres of land. Patchett said Google spent $600 million on the buildout—which would suggest a property tax savings of at least $9 million a year.

“Without the tax-exemption program, they wouldn’t have considered building in The Dalles,” said Dan Durow, community development director for the city. There is at least one string attached: Google must pay its 200 employees an average salary of $42,600, or 150 percent of the county average, which was $28,395 in 2006, according to Durow. The company has five years to certify those employment figures, he added, which it has not done yet. I talked to two workers at Google who wouldn’t say how much they were paid, but indicated it was much less than $42,600 a year.

There is little doubt that residents of The Dalles have embraced Google’s presence. Outwardly, there has not been much visible change, save for a fancy French bakery downtown and a Home Depot where The Dalles Drive-In once sat.

But Carolyn Wood, a city councilor, said Google’s investment has been huge. “We’ve been discovered,” Wood says. “And that is sparking new investment from outside the community.” She points to the construction of new homes as well as the appearance of more traffic in town. But for Wood it really boils down to one thing: “Business is good.”

It’s a big change from the ’80s, when the aluminum plant first closed. At the time, The Dalles had one of the highest unemployment rates in the United States: about 15 percent.

“Land values in the mid-’80s had dropped in half,” said Durow. “It was the worst of the worst of times.”

The biggest change is in home prices. As soon as word spread across town that Google was headed there, says broker Keef Morgan of Windermere Realty, home prices in The Dalles rose 60 percent in the six months between February and August 2005—and stayed there. “In 2003, the average three-bedroom home went for $90,000,” Morgan says. “In 2008, they go for $199,000.”

If California has the Silicon Valley, and Portland is part of the Silicon Forest, then The Dalles is the new Silicon Prairie. For Van Cleave and others, it marks the beginning of a new information superhighway.

Klaas says there are at least seven businesses that have shown interest in setting up in The Dalles, though she would not disclose any details. Upriver, Microsoft and Yahoo are discussing plans to build their own server farms. Another data center could soon be built 80 miles upriver from The Dalles, in Boardman, Ore. The nearby Port of Morrow, however, would not disclose any information about such a project.

But there’s a hitch.

In 2011, the Bonneville Power Association is planning to tier its rates for preferred customers. After 2011, companies getting cheap power rates will have to pay market rate for any additional electricity they use. Which means that if Google grows, it will have to pay more for additional power.

Unless Google cuts a deal.

Which we would probably never know about.

But the fact is, Columbia River hydro riches are priceless. They’ve drawn people to The Dalles for generations, from the first indigenous tribes to the French fur traders who named this place to today’s corporate titans who have fought to profit from the region’s inexpensive hydropower.

Now it’s Google’s turn. It will be interesting to see who tries to tap into my hometown next.

SEND IN THE CLOUDS: Part of Google’s strategy for the future involves “cloud computing,” which means we’ll no longer need personal computers for work or pleasure, or much new hardware or software. Everything we need will be found on the Web in various applications—stored in servers, or super-servers, across the world. That’s why Google is building data centers like the one in The Dalles and the world over. “That massive investment should translate into the ability to build applications that are impossible for our competitors to offer, just because we can handle the scale,” said Google CEO Eric Schmidt in a 2006 article for Fortune magazine.

When Sergey Brin and Larry Page created Google in 1995, its motto was “don’t be evil.”

A McKinsey study states that greenhouse gas given off by ever-expanding data centers will exceed heavy polluters, like the airline industry, by 2020.

“Big companies with the experience and scale to come in and win bigger contracts are preventing smaller businesses from growing,” says Jonathan Cohen, owner of Oregon-based Imagine Energy.

A drive around The Dalles confirms Google’s low profile. I eventually found a small flier on the window of the Hampton Furniture Co. advertising “Doodle 4 Google,” a chance for kids to reinvent Google’s distinctive home page with the theme “What If….”

Patchett says 70 percent of Google employees come from the area. The “area” defined by Patchett is within a 4 1/2-hour radius. Google also shuttles more than a dozen employees from Portland and Hood River every day.